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Protecting Seniors from Financial Abuse: Spotting the Signs and Taking Action

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Understanding Financial Abuse of Elders: A Growing Concern

Financial abuse of elders is a critical issue affecting millions of seniors worldwide. As our loved ones age, they may become increasingly vulnerable to various forms of exploitation, including financial abuse. This type of mistreatment occurs when someone misuses or takes control of an elderly person’s financial resources without their consent, often leaving them without the means to support themselves. It is a deeply troubling issue that can have lasting consequences on the victim’s life, from financial strain to emotional turmoil.

The purpose of this article is to shed light on the issue of financial abuse of elders, provide guidance on how to spot the warning signs and offer practical advice on what you can do to help protect your loved ones. By raising awareness and promoting vigilance, we can work together to support and safeguard our aging population. With a friendly and helpful tone, we will discuss the scope of the problem, how to recognize financial abuse and the necessary steps to prevent and intervene in such cases.

Scope of the Problem

Prevalence of Financial Abuse of Elders

Financial abuse is alarmingly prevalent among the elderly, with studies estimating that one in ten seniors has experienced some form of financial exploitation. However, these numbers might be even higher, as many cases go unreported due to shame, fear, or lack of awareness. Understanding the extent of this issue is crucial in order to effectively address and prevent it.

General Statistics

  • An estimated 5 million older adults in the United States are victims of financial abuse each year.
  • Financial exploitation of seniors results in annual losses of around $36.5 billion.
  • Only one in 44 cases of elder financial abuse are reported to authorities.

Demographic Differences

  • Women are more likely to be victims of financial abuse than men.
  • Elders with cognitive impairments, such as dementia or Alzheimer’s disease, are at a higher risk of financial exploitation.
  • Seniors living alone or experiencing social isolation are more susceptible to financial abuse.

Consequences of Financial Abuse

Financial abuse can have severe and long-lasting effects on elderly victims. It is essential to recognize the potential consequences to better understand the gravity of this problem.

Financial Loss

  • The average loss per victim of financial exploitation is estimated to be around $120,000.
  • Financial abuse can lead to the loss of an elder’s life savings, retirement funds, and property, potentially forcing them to rely on government assistance or family support.

Emotional and Psychological Impact

  • Victims of financial abuse often experience feelings of shame, guilt, and betrayal, particularly if the abuser is a close family member or caregiver.
  • The stress and anxiety associated with financial exploitation can exacerbate existing health problems and increase the risk of depression.

Loss of Independence

  • Financial abuse can result in an elder losing their independence, as they may be unable to afford essential services like healthcare, housing, and food.
  • In some cases, victims may be forced to move in with family members or enter a long-term care facility.

Recognizing Financial Abuse

Being able to identify the warning signs of financial abuse is critical to preventing and addressing this issue. By staying vigilant and informed, you can help protect yourself and your loved ones from potential exploitation.

Common Signs of Financial Abuse

Unusual Bank Activity

  • Sudden or unexplained withdrawals, transfers, or large purchases.
  • Frequent withdrawals from ATMs or multiple checks written to the same person.
  • New credit cards or lines of credit are opened without the elder’s knowledge.

Changes in Spending Habits

  • An elder suddenly struggles to pay bills or maintain their standard of living.
  • Unpaid bills or utilities, despite having the financial means to cover them.
  • A sudden decrease in the elder’s overall net worth.

Legal Documents Being Altered

  • Changes to wills, trusts, or power of attorney documents without the elder’s full understanding or consent.
  • Missing or misplaced financial documents and statements.
  • Forged signatures on checks or legal documents.

Missing Possessions

  • Valuable items, such as jewelry, artwork, or electronics disappear without explanation.
  • Unusual or unexplained transactions, such as selling property or investments.

Common Perpetrators of Financial Abuse

Understanding who is most likely to commit financial abuse can help you stay vigilant and protect your loved ones.

Family Members

  • Adult children, grandchildren, or other relatives taking advantage of an elder’s trust or goodwill.
  • Family members assume control of the elder’s finances without proper authorization.

Caregivers

  • Paid or unpaid caregivers use an elder’s money or property for their own benefit.
  • Caregivers isolate the elder from family and friends to gain control over their finances.

Scammers and Fraudsters

  • Scams targeting seniors, such as lottery or sweepstakes scams, romance scams, or home repair fraud.
  • Identity theft and financial fraud perpetrated by strangers.

Examples of Financial Abuse

Example 1: Family Member Taking Control of Finances

An adult child convinces their elderly parent to grant them power of attorney, allowing them to make financial decisions on their behalf. The adult child then uses the parent’s money for their personal expenses, leaving the elder without the necessary funds to cover their living costs.

Example 2: Caregiver Stealing Money

A caregiver gains the trust of an elderly person and is given access to their bank accounts. Over time, the caregiver withdraws money for their personal use without the elder’s knowledge or consent.

Example 3: Scam Targeting Elders

An elderly person receives a call from a scammer claiming they have won a large sum of money but must first pay taxes or fees to claim the prize. The senior, believing they have won, sends the requested funds, only to discover later that the prize was a scam.

Prevention and Intervention

Taking proactive steps to protect yourself and your loved ones can significantly reduce the risk of financial abuse. In cases where abuse is already occurring, knowing how to intervene is crucial for safeguarding the elder’s well-being.

How to Protect Yourself and Loved Ones

Open Communication

  • Encourage regular and open conversations about finances with elderly family members.
  • Ensure they feel comfortable discussing any concerns or suspicions with you or another trusted individual.

Financial Planning and Legal Documents

  • Help seniors create a comprehensive financial plan and ensure their legal documents are up-to-date.
  • Encourage the use of professional financial advisors and attorneys to assist with financial management and legal matters.

Regular Monitoring of Financial Activities

  • Offer to help elderly loved ones monitor their bank accounts and credit reports for unusual activity.
  • Set up alerts for large transactions or other suspicious activity on their accounts.

Steps to Take if You Suspect Financial Abuse

Gather Evidence

  • Document any suspicious financial activity, missing possessions, or changes in spending habits.
  • Keep a record of conversations with the elder about their financial concerns.

Report to the Appropriate Authorities

  • Contact local law enforcement, Adult Protective Services, or other relevant agencies to report suspected financial abuse.
  • Provide authorities with the evidence you have gathered to support your claims.

Reach Out to Support Networks

  • Inform family members, friends, and trusted neighbors of your concerns.
  • Seek guidance from professionals, such as attorneys, financial planners, or social workers, who can help navigate the situation and provide support.

Additional Resources and Organizations

There are several organizations dedicated to addressing elder financial abuse and providing support to victims and their families.

National Center on Elder Abuse (NCEA)

The NCEA offers resources, research, and educational materials to help raise awareness about elder abuse and promote prevention strategies.

Website: https://ncea.acl.gov

AARP’s Fraud Watch Network

The AARP Fraud Watch Network provides information on scams targeting seniors, as well as tools and resources to help protect against financial exploitation.

Website: https://www.aarp.org/money/scams-fraud/fraud-watch-network/

Eldercare Locator

The Eldercare Locator is a public service that connects older adults and their families with local support services, including legal assistance, financial counseling, and more.

Website: https://eldercare.acl.gov

Conclusion: Combating Financial Abuse Together

Addressing the issue of financial abuse of elders requires a collective effort from individuals, families, and communities. By staying informed and vigilant, we can help protect our loved ones from exploitation and safeguard their financial well-being.

As we have discussed, it is crucial to recognize the signs of financial abuse, understand the potential perpetrators, and take preventive measures to protect our aging population. If you suspect financial abuse is occurring, gather evidence, report your concerns to the appropriate authorities, and reach out to support networks for assistance.

By raising awareness and fostering a supportive environment, we can help reduce the prevalence of financial abuse and ensure that our seniors maintain their independence, dignity, and financial security. Let us all take action and work together to create a safer, more secure future for our elderly loved ones.

About the Author

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Rick Munster

Rick Munster is a personal finance expert and author with over 21 years of experience in the credit counseling industry. He currently serves on the board of directors for the Financial Counseling Association of America and has written over 200 articles on personal finance. Rick's expertise has been recognized by several prominent online organizations, which have quoted him on issues related to credit counseling, debt management, and financial education. With more than 20 years of experience at Money Fit, a non-profit credit counseling organization, Rick has established himself as a trusted authority in the field of personal finance.
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You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
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NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
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You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

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NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

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Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.
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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).